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Ceo Overconfidence And Stock Price Crash Risk, Jeong-Bon Kim, Zhang Wen, Liandong Zhang
Ceo Overconfidence And Stock Price Crash Risk, Jeong-Bon Kim, Zhang Wen, Liandong Zhang
Research Collection School Of Accountancy
This study examines the association between chief executive officer (CEO) overconfidence and future stock price crash risk. Overconfident managers overestimate the returns to their investment projects and misperceive negative net present value (NPV) projects as value creating. They also tend to ignore or explain away privately observed negative feedback. As a result, negative NPV projects are kept for too long and their bad performance accumulates, which can lead to stock price crashes. Using a large sample of firms for the period 1993–2010, we find that firms with overconfident CEOs have higher stock price crash risk than firms with nonoverconfident CEOs. …
Ceo Overconfidence And Management Forecasting, Paul Hribar, Holly I. Yang
Ceo Overconfidence And Management Forecasting, Paul Hribar, Holly I. Yang
Research Collection School Of Accountancy
This paper examines how overconfidence affects the properties of management forecasts. Using both the ‘over‐optimism’ and ‘miscalibration’ effects of overconfidence to generate our predictions, we examine three research questions. First, we examine whether overconfidence increases the likelihood of issuing a forecast. Second, we examine whether overconfidence increases the amount of optimism in management forecasts. Third, we examine whether overconfidence increases the specificity and precision of the forecast. We use both options‐ and press‐based measures to proxy for individual overconfidence, and find support for all three research questions. We further find that the results are concentrated among firms that provide forecasts …